May 2010

Feds Go After JP Morgan Chase for Silver Market Manipulation

The New York Post is reporting:

Federal agents have launched parallel criminal and civil probes of JPMorgan Chase and its trading activity in the precious metals market, The Post has learned.

The probes are centering on whether or not JPMorgan, a top derivatives holder in precious metals, acted improperly to depress the price of silver, sources said.

Must Read Posts for May 8, 2010 - Greece Edition

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On The Economic Populist you might have noticed the left column. We try to list other sites and blogs who have exceptional insight and writing on what is happening in the U.S. economy.

Sometimes though, one cannot say it better but miss those who did. These posts are all related to the Greek Crisis.

Must Read Post #1

The New York Times has a fantastic graphic of the interdependence in Europe on Greek Debt with an accompanying article describing the EU dominoes.

 


Click on Image to Enlarge. Source: New York Times

 

Unemployment 9.9% for April 2010

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The April 2010 monthly unemployment figures are out. The rate increased to 9.9% and the number of jobs gained is 290,000. How the rate can increase when the U.S. gained that many jobs will be answered below.

Nonfarm payroll employment rose by 290,000 in April, the unemployment rate edged up to 9.9 percent

 

 

Below is the nonfarm payroll, seasonally adjusted:

 

 

Dow Goes Nuts!

The Dow goes nuts! It dropped 1000 points suddenly. CNBC is reporting it was a human error, someone entered a B instead of a M for millions. Update: CNBC (what a surprise), is full of it. There was no typo which caused the biggest DOW drop in history. Citigroup, the unnamed typoist, is fairly irritated about it too for they looked over their trades and there was no typo.

Productivity & Costs Q1 2010

Labor Productivity is still squeezing the middle class to death. Labor Productivity rose 3.6% in Q1 2010 after an astonishing 6.2% jump in Q4 2009. Output increased 4.4% and hours worked increased another pathetic 0.8%, annual rate. Hourly compensation increased 2.3%.

For the year labor productivity increased 6.1% and hours worked fell 3.0%.

This gain in productivity from the same quarter a year ago was the largest since output per hour increased 7.0 percent over the four-quarter period ending in the first quarter of 1962.

Think about bad trade deals, offshore outsourcing, insourcing (or bringing in cheap labor, undercutting U.S. workers wages and jobs). There is no way this is due to your iPhone or advances in technology, which is the common blow off response from economists.

Below is productivity, compounded against last quarter percent change:

 

The Information that was Missing from Last Friday's GDP Report

The April 30th GDP report issued by the Bureau of Economic Analysis ("BEA") of the U. S. Department of Commerce was a freeze-frame quarterly snapshot of a highly dynamic economy -- an economy that another source indicates was in significant transition while the snapshot was being taken.

Compared to the 4th quarter of 2009, the annualized growth rate of the GDP had dropped by 43%. Depending on your point of view this could be interpreted either as a glass that is "half-full" or a glass that is "half-empty":

1) The "half-full" reading would mean that the GDP numbers confirm that the recovery had at least moderated to a historically normal growth rate. In this scenario the good news would have been that "the economy is still growing," albeit at a historically normal rate. The bad news would have been that a normal growth rate would only warrant normal P/E ratios in the equity markets.

2) The "half-empty" reading would have meant that the near halving of the GDP's growth rate confirmed that (at the factory level) the economy had finally begun to "roll over". If so, the BEA's announcement portends even lower readings in the quarters to follow.

What was clearly missing in the "half-full/half-empty" debate was a feel for whether the level seen in the snapshot's glass was stable or still dropping. At the Consumer Metrics Institute our measurements of the web-based consumer "demand" side economy support the "half-empty" reading of the new GDP data. The new GDP numbers (which are subject to at least two revisions) agree with where our "Daily Growth Index" was on November 24th, 2009, 18 weeks prior to the end of 2010's first calendar quarter -- and when that index was in precipitous decline.

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